TRENTON, N.J. (WCBS 880) -- Investments in education and infrastructure, an end to corporate loopholes, and a tax hike on those with incomes of $1 million or more, were among the highlights of a $37.4 billion budget plan that New Jersey Gov. Phil Murphy announced Tuesday.

In his budget address, Murphy also doubled down on his call for the legalization of recreational marijuana in New Jersey.

Murphy, who took office in January, said the budget plan included a projected surplus of $743 million -- though it is $2.7 billion larger in total than the previous year's budget. He said the millionaires’ tax that was written into the budget would be beneficial for everyone.

“Yes, a millionaires’ tax is the right thing to do – and now is the time to do it,” Murphy said.

Murphy emphasized that the tax hike will not affect a family earning $50,000, $75,000, $100,000, $250,000, $500,000, or even $1 million a year.

“We are standing for fairness and fiscal responsibility by asking those with taxable incomes in excess of $1 million to pay a little more,” Murphy said. “The irrefutable fact is that we have a thousand more millionaires today than we did at our pre-recession peak, and I’m sure none of them are here for the low taxes. They are here because we can offer an unmatched quality of life.”

Murphy said the tax hike would raise about $765 million “for the investments we must make in all our residents.”

The budget also includes a plan to bring the state’s sales tax back to 7 percent, where it was before former Gov. Chris Christie got it to dip down to 6.625 percent.

In advocating for legalizing adult-use marijuana, Murphy said too many New Jerseyans – particularly young men and women of color – have ended up going to jail and seeing their lives ruined for nonviolent drug offenses. He said it is not only an injustice, but a waste of money.

“According to research, New Jersey spends upwards of $140 million per year adjudicating low-level marijuana possession offenses,” Murphy said. “And, marijuana-related arrest rates are tilted three-to-one against African-Americans, even though rates of marijuana use are similar among races.”

Murphy said the funds that are directed toward prosecuting low-level marijuana offenses could be put to other uses – such as fighting the illegal gun trade, providing community policing, or battling the opioid epidemic.

He said decriminalizing the possession of small amounts of marijuana is not enough, and it will not “put the corner dealer out of business, it will not help us protect our kids, and it will not end the racial disparities we see.”

“If these are our goals – as they must be – then the only sensible option is the careful legalization, regulation, and taxation of marijuana sales to adults,” Murphy said.

Murphy wants to legalize marijuana by New Year’s Day next year and tax it at 25 percent.

Meanwhile, without mentioning Republican predecessor Christie by name, the Democrat Murphy said for eight years, “costs increased while services declined” in New Jersey. Murphy said in the time before he took office, property taxes rose while public schools were underfunded, while NJ TRANSIT was “effectively starved through draconian budget cuts” and infrastructure continued to crumble.

He said the mission of the new budget was to correct those trends.

Murphy said his budget plan would increase investment in public school classrooms by $341 million, so as to begin “a four-year phase-up to fully funding our public schools.”

He also called for a revision of the current school funding formula “so we can reach this goal of full, fair funding by the 2021-2022 school year.”

The budget also called for starting New Jersey down a four-year path to statewide expansion of pre-kindergarten. He said it adds $57.6 million on top of the $25 million in new funding for pre-K that the state Legislature ensured for this year.

“Decades of studies tell us that pre-K builds a strong foundation for a child’s educational future. We know it has profound effects on closing the achievement gap,” Murphy said. “We know it has positive benefits that continue even into adulthood – that every dollar we put into pre-K pays us back many times over throughout that child’s life.”

Murphy said the budget will also restore funding to NJ TRANSIT so as to make it “a reliable and respected service” once more. He said the Christie administration had slashed the NJ TRANSIT budget by 90 percent and had forced the agency to tap into long-term capital programs to pay for its day-to-day expenses.

“And we know where that got us – waiting for too many trains and buses that never came,” Murphy said.

Under the new budget, funding to NJ TRANSIT will be nearly tripled with an investment of an additional $242 million, Murphy said.

Murphy also criticized the Christie administration for giving away corporate tax credits to the tune of more than $8 billion.

“These massive giveaways – in many cases imprecisely directed – will ultimately deprive us of the full revenues we desperately need to build a stronger and fairer economic future,” Murphy said, claiming that the tax breaks had failed to bring New Jersey “back to health” as promised.

Murphy said he was not against tax incentives on principle, but he said they must be distributed “responsibly and as part of a broader package of incentives and investments that the state can make to better the climate for all businesses, not just a few favored actors.”

The budget will also invest in working families by increasing the Earned Income Tax Credit from 35 percent to 40 percent of the federal benefit over three years, Murphy said.

He also called for earned sick leave for workers in New Jersey, and for raising the minimum wage to $15 per hour.

“Raising the minimum wage to $15 an hour will boost the incomes of 1.2 million New Jerseyans, and allow them to participate in the economy with dignity. After all, we know what hard-working families do when they have more money -- they spend it in the real economy,” Murphy said. “Maybe they will be able to take their family out to dinner. Maybe they’ll be able to afford a summer afternoon on the boardwalk.”

Murphy also called for increasing the state property tax deduction from its current limit of $10,000 – as dictated by the federal tax reform plan passed in December – to $15,000. His budget also calls for a revision of the corporate tax law that allows large companies to park their New Jersey profits elsewhere to avoid paying taxes – a benefit that small businesses cannot enjoy.

Murphy’s budget will also create what he classified as new benefits and services in line with New Jersey’s values – including a new Child and Dependent Care Tax Credit for middle-class and working families, and $7.5 million for women’s health care.

“We will live up to our promise of providing $7.5 million for women’s health care. Cutting access to primary care, critical health screenings, and family planning services to tens of thousands wasn’t fair and it certainly didn’t make us stronger,” Murphy said. “We reversed this, and we will keep our word.”

The budget also allocates $2 million for a new Gun Violence Research Center that will be based at one of the New Jersey state universities.

“Congress has refused to fund such necessary research for over two decades,” he said. “It is now up to the states to lead.”

Murphy said overall, he is optimistic about New Jersey’s economic future, but an investment in a “fairer and stronger” New Jersey must be undertaken.

“For everyone who cares about commonsense gun safety laws, a 100-percent clean energy future, women’s health care, the rights of our LGBTQ brothers and sisters, or immigration policies that allow diverse and safe cities to flourish, the pull of New Jersey will become inescapable,” he said.

Republicans in the state Legislature attacked the governor’s plan, saying it would crush the middle class forcing more taxes on already overtaxed families.